State Disability Plan

Definition - What does State Disability Plan mean?

A state disability plan is a state-implemented insurance plan that financially supports employees who incur an injury or disability and become unable to work. In other words, it is simply disability insurance provided by the state. As for the funding for these benefits, certain states require both employee and employer contributions. Employees would pay the premiums through payroll taxes. As of 2015, the Commonwealth of Puerto Rico, Rhode Island, New York, New Jersey, California, and Hawaii provide state disability plans.

Insuranceopedia explains State Disability Plan

Each state or commonwealth governs the structuring and administration of state disability plans. The benefits generally only replace just a percentage of one's income, but nevertheless, prove to be a financial boon for those who cannot work due to a disability. Long- and short-term disabilities generally have their own specific rules and conditions for eligibility and benefit amount and length. In certain states, there may also be other options for receiving disability insurance, such as voluntary plans and elective coverage. However, in such states, many people simply opt for state disability plans due to the convenience and wide-scale use..

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